Property off the market, termination of contract and property temporarily unavailable: Concepts not to be confused
Property off the market and termination
Sometimes during the term of an irrevocable exclusive brokerage contract, the seller may no longer wish to sell his immovable. In such a case, and after agreement, the seller’s broker can terminate the contract (cancelation) or, if there is no contract cancelation agreement, must take the property off the market after explaining the scope of this decision to the seller. When the brokerage contract is revocable, the seller who wishes to terminate it may simply do so by sending a written notice to that effect to the agency.
If the property is taken off the market, standard clause 2.1 of the OACIQ book of standard clauses can be used and recorded in the mandatory form “Amendments”. This clause reads as follows:
"The parties agree to take the property off the market. Therefore, the BROKER or AGENCY is suspending any activity aimed at selling the immovable, including any advertising. All other rights and obligations contained in the brokerage contract remain in effect until the expiration of the contract."
Unlike termination that cancels the brokerage contract and by the same token the obligations of seller and his broker, taking a property off the market is rather an agreement between the seller’s broker and his client in which some of the broker’s obligations are suspended until the expiration of the brokerage contract.
Although the contract remains in force until its expiration, the broker can no longer take any action to sell the immovable. As the contract is not terminated, the seller, for his part, is not released of his contract obligations towards the broker. This means, among other things, that in the case of an Exclusive brokerage contract - Sale, the seller cannot offer the immovable for sale without the broker’s intervention nor list the property with another broker, until the expiration date indicated on the contract. Otherwise, the compensation indicated in the brokerage contract would become payable.
The parties may agree on the fees when changing the contract to take the property off the market. It is obviously important that the agreement respect the common rules of good faith and that the seller’s consent be obtained in accordance with the rules.
Finally, note that the 180 – day period indicated in clause 7.1 of brokerage contract – sale forms will begin only from the date the brokerage contract is terminated or from expiration in the case of a property off the market.
Immovable not available for visits
If faced with a situation where the seller does not want his immovable to be visited for a certain period, an amendment must be made to the brokerage contract using the mandatory form “Amendments” to specify the period during which the property cannot be visited. In this case it is not about a property off the market because the property will continue to be offered for sale. Accordingly, broker’s obligations will not be suspended.
The information must be sent immediately to the dissemination service indicated in the brokerage contract in order to notify all potential buyers’ brokers, if applicable. The latter can then delay the visits of their clients or, if the promising buyer wants to make a promise to purchase, brokers should draft one which will be conditional upon the visit to the immovable. Note that you will not have to complete the “Amendments” form if this period of unavailability is already provided in the brokerage contract.
Concerning the termination of a contract, please read the following article: Cancellation of a brokerage contract.
We also invite you to read the following article: The real estate broker’s right to compensation after the expiry of the brokerage contract.